Japan's producer price index (PPI) in September increased by 2.8% compared to the same month last year, while remaining unchanged from August. This data was released by the Bank of Japan on Thursday. In August, the PPI had registered a 2.6% rise on a year-on-year basis according to official statistics.
The PPI reflects the price of goods produced within Japan at the factory gate, specifically when sold in bulk to large buyers. It is distinct from the consumer price index (CPI), which measures prices at the retail level. The PPI serves as a leading indicator for the CPI, as retailers typically adjust prices based on their operational costs.
Similar to trends seen in many Asia-Pacific nations, Japan's PPI remained relatively stable prior to the pandemic but started to increase due to supply chain disruptions and governmental economic stimulus measures. The peak of Japan's PPI inflation rate was recorded at 10.6% year-on-year in December 2022, subsequently easing to nearly zero by early 2024.
Over the past few months, PPI inflation rates have fluctuated between 2% and 3%. The Bank of Japan aims for a 2% annual inflation target for the nation's core CPI, which excludes fresh food prices. In 2024, the central bank made a modest adjustment to key interest rates, currently targeting 0.25% for short-term deposits and 1% for 10-year Japanese government bonds.
During recent policy meetings, officials from the Bank of Japan exhibited mixed feelings regarding further interest rate hikes, balancing the necessity to address inflation with efforts to stimulate wages and consumption to enhance the overall economic output. In August, Japan's core CPI also increased by 2.8% compared to the previous year as reported by the Bank of Japan.
Additionally, the import price index, measured in yen, dropped by 2.6% year-on-year in September, while the export price index fell by 1%..